Extreme discounts on the App Store by large publishers are prompting smaller companies to move to freemium models rather than compete with cheap paid apps and their huge marketing budgets.
Last Christmas Electronic Arts dropped prices for a majority of its branded games on iOS platforms, flooding the top slots in the charts and saturated marketing channels on the App Store.
The practice was criticised by rival publisher Gameloft, but companies like Canadian publisher Fuse Powered saw it as an opportunity to change its entire approach to the mobile games business.
"That's one of the things that motivated us to transition our business model," said CEO Jon Walsh in an interview published today. "That idea that a big publisher can drop prices, take a hit and fill up all those top slots."
"That said two things: paid games are always going to have that risk. The big publisher is basically selling at an extremely low cost to gain market share and if it works for them they are going to continue to do it. So we can either complain about it or make sure our business model works around it. That's where the freemium model works for us."
For Fuse Powered, which has so far published titles such as Dawn of the Dead and Jaws Revenge, the company hopes to build a dedicated network of players by releasing multiple titles on a regular basis. It can then cross-promote its games within its own network. With six titles planned for the next three months, the company hopes to have 24 games out by the end of 2012.
"It also said to us that we need to go towards a publishing model where we have a base of really avid players that are enjoying our games so that when we bring out more stuff we don't need to get into those top 25 positions in the App Store, we can deliver directly to the existing player base," offered Walsh.
"That will be a continued risk for people selling 99 cent games."